THE GREAT QUESTION: TO REPAIR OR LEAVE AS-IS?
-Edgar
Many times I see sellers facing this question, sellers will have all different ways of trying to justify their reasoning and they will think that by doing upgrades while spending the least amount of money will make their property worth will be at par with another at the highest price point for that particular market hoping to sell for that high price. So they will get a handyman (most likely unlicensed) to perform bathroom upgrades such as tile, plumbing fixtures, light fixtures and most of the time kitchen cabinets counter tops and new appliances. All being done with the least amount of money which means everything has been performed with the cheapest materials and labor cost and of course new paint inside and out. For some lower price point properties this would seem to be a good decision. It would seem to now be able to get it sold to the top of other comparables sold houses.
Now buyers decided to buy the fixed up home and the process begins, soon the buyer’s property home inspector is called. This home inspector is contracted by the buyers and will report to them as to any and all matters of the house. Through the years I have seen some very good ones and some that are terribly unknowledgeable and will ruin the sales transaction due to their incompetence. Well enough about those, but the good experienced ones will see all upgrades and if they know their trade they will discover that together with the new kitchen and bathrooms one key problem is that the electrical in both areas has not been brought up to current code, most of the time this should have been done by upgrading the electrical panel to include ground wiring as code requires. So the dilemma for buyers do they make the seller repair, ask for credit for them to repair, or just live with the incompetent work performed? That is a discussion for another time, the home inspector will not ask for city final approval as he is only reporting to the buyers. Now is the term for appraiser to perform his inspection, this time again the buyer (most of the time) will pay for appraisal only. Now appraiser is working for the lender, not for the seller, not for the buyer, only for the lender. Now remember the intention was to obtain the highest price possible. In order for appraiser to justify this top of the market price, they will all of the upgrades through writing and photographs that will support the sales price. Because of this, he will need to verify that all work has been done up to current building codes and will ask for finalized sign off from building department. If permits were never acquired, the appraiser will make note of this in his report, remember who he is working for. So the report gets to the lenders underwriter and reviewer and now they will ask seller to provide finalized building department permits since it says so in the appraisal report and remember you want top value, it won’t happen. The lender has to justify the value and the property possesses no health or safety issue. So now the seller has to obtain permits or more than likely lender will not fund the transaction. Unintended consequence, by trying to obtain top market value seller upgrade for a cost of $28,000, but if he would of done it up to code it had a cost of $52,0000. So before you decide to perform upgrades please make sure you can provide proof that the property can be justified to obtain top market value, I at www.housemaxvalue.com have seen this scenario many times, many more things must be considered when selling a house, in many cases it is better to sell with housemaxvalue.com and discount the actual cost of authorized renovations, especially if you are living In the house. The net result would have been fast sell, no construction problems, net to seller was the same. Call if you have any questions (562)551-8583.